ADB Backing Energy Cooperation
between Afghanistan and Tajikistan

MANILA,
PHILIPPINES, Dec 22, 2006 -- M2 PRESSWIRE

ADB is backing a project to tap Tajikistan's
power surplus to meet shortfalls in neighboring
Afghanistan through loans to the two countries totaling
US$56.5 million. Tajikistan's annual generated capacity
is 4,405 MW, most of which comes from hydropower.
An annual surplus of about 1,500 gigawatt-hours
is available for export, but only for about half
a year during the spring-summer period. Part of
the surplus is already exported through Uzbekistan
via its southern grid while the rest is not utilized.

Afghanistan, on the other hand, faces
serious power supply shortages, which are expected
to become more acute as demand grows. Its power
generation, transmission and distribution systems
have been severely damaged by years of conflict.
All around the country, including the capital Kabul,
power is available for just a few hours a day.

To meet the needs of both countries,
the project will construct a 220 kilovolt double
circuit transmission line that will link the hydropower
stations on Tajikistan's Vakhsh River to the border
town of Sherkan Bandar, then to Kunduz, Baglad,
Pul-e-Khumri and, ultimately, Kabul in Afghanistan.

The project will also include new
investments and upgrading in Tajikistan that will
help reduce the winter power deficit by boosting
the available level of generation and decreasing
technical losses in the south of the country resulting
in an additional 320 gigawatt-hours annually.

"The project offers a win-win situation
for both Afghanistan and Tajikistan," says Xavier
Humbert, an ADB Energy Specialist. "It will restore
power supply and reduce costs for consumers in the
former while allowing Tajikistan to export 300 megawatts."
The total net economic benefits of regional cooperation
of the project are estimated to be $114 million,
split fairly evenly between the two countries.

ADB's loans - $35 million to Afghanistan
and $21.5 to Tajikistan - come from its concessional
Asian Development Fund and carry a 32 year term,
including a grace period of 8 years. Interest on
each is charged at 1% per annum during the grace
period and 1.5% during the rest of the term.

Other financiers of the project,
which will cost an estimated $109.5 million, are
the OPEC Fund for International Development, Islamic
Development Bank, Afghanistan Reconstruction Trust
Fund, and the Afghanistan and Tajikistan governments.

The Ministry of Energy and Water
in Afghanistan and Barki Tajik in Tajikistan are
the executing agencies for the project, which is
due for completion in March 2009 and June 2010 in
the two respective countries.